As many as 1,700 of those weapons have since been lost, and more than 100 have been found at bloody crime scenes on both sides of the border, including the murder of a U.S. Border Patrol agent in Arizona last December. In a letter obtained by the Los Angeles Times yesterday, Justice Department officials acknowledged that Fast and Furious weapons have been linked to at least 11 other crimes in the U.S.

The gunrunning operation is now the subject of a Congressional investigation, led by U.S. Rep. Darrell Issa (R-CA) and U.S. Sen. Charles Grassley (R-IA), to identify who in the DOJ was responsible for or knew about the sting. Issa and Grassley have made it clear that Holder — a confidant of President Barack Obama — is a central focus of their probe.

"I do have serious concerns that the attorney general should have known a lot more than he says he knew," Issa, the chairman of the House Oversight Committee, told the Washington Post. "In some ways, I'm more disappointed that he's saying he didn't know than if he says he was getting briefings and he didn't understand."

So far, the DOJ has stonewalled the Issa/Grassley probe. But recent testimony from the embattled ATF director made the astounding claim that the cartel leaders targeted by Fast and Furious were allegedly paid informants for the Drug Enforcement Administration and the FBI.

If true, these allegations could taint the entire Justice Department.

As the investigation widens, Holder will likely face some tough questions about how an ill-fated operation to actively arm — and perhaps pay — Mexico's brutal drug cartels could have happened under his watch, with or without his knowledge.

Here's our guide to Operation Fast and Furious:

What is Operation Fast and Furious?

In October 2009, directors of the FBI, the DEA, the ATF, met with DOJ officials in Arizona and Washington to form a new strategy to track guns smuggled to high-level cartel suspects. The new strategy, dubbed "Project Gunrunner," emphasized identifying and eliminating gun smuggling networks, rather than prosecuting the individual "straw purchasers," who buy guns for the cartels. Instead of arresting the straw buyers, ATF agents would track the guns to the top cartel bosses.

On paper, the strategy made sense. There is virtually no incentive for the straw buyers to become informants — typically the toughest consequence they face is probation. Further, nearly everyone working for the cartels has relatives and friends in Mexico who would become targets if they turned, which makes the organizations notoriously difficult to crack.

Fast and Furious is technically legal under ATF rules because the agents were not directly supplying guns to the cartels. But the danger of letting guns walk is obvious — more than 40,000 people have been killed in drug violence in Mexico since 2006.

ATF agents in Phoenix immediately implemented the strategy, dubbing their program Operation Fast and Furious because most of straw buyers worked at auto shops, like Vin Diesel's character in the 2001 movie The Fast and the Furious. According to an ATF briefing paper from January 2010, the ATF agents worked with the Phoenix DEA and the U.S. prosecutors in Arizona on the investigations. In some cases, ATF agents even used DOJ-funded wire tapping to track the guns.

While DOJ officials have claimed Fast and the Furious guns were tracked, testimony from ATF agents and evidence from the agency's database shows that more than half of the guns were lost after they crossed the border. Nearly 200 were recovered at crime scenes in Mexico, and the Justice Department said that weapons have also been found in at least 11 "violent crime instances" in Arizona and Texas.

Who Knew What?

According to Issa and Grassley's first report, released in May, Operation Fast and Furious was "known and authorized at the highest level of the Justice Department."

"Through both the U.S. Attorney's Office in Arizona and "Main Justice," headquarters in Washington, D.C., the Department closely monitored and supervised the activities of the ATF," the report says.

"The Department of Justice, and more specifically, Assistant Attorney General Lanny Breuer, clearly knew about Operation Fast and Furious. Further, the Department of Justice's Office of Enforcement Operations (OEO) approved numerous of the wiretap applications in this case. These applications were signed on behalf of Assistant Attorney General Breuer in the spring of 2010."

In a May Congressional hearing, Issa and Holder had a tense exchange about Operation Fast and Furious, in which Holder said he was not sure of the exact date he first heard of the operation. He also said he could not say who authorized the operation.

When asked specifically if Breuer had authorized it, Holder responded:

"I'm not sure whether Mr. Breuer authorized it. I mean, you have to understand the way in which the department operates. Although there are — there are operations, this one has become — has gotten a great deal of publicity."

DOJ has not responded to Business Insider's request for comment on when Holder learned of Breuer's involvement in Fast and Furious. The DOJ's Office of the Inspector General is conducting its own internal review of the operation.

President Barack Obama has categorically denied that he or Holder had authorized the operation.

"Well, first of all, I did not authorize it," Obama said in a March interview with Univision. "Eric Holder, the attorney general, did not authorize it. There may be a situation here in which a serious mistake was made. If that's the case, then we'll find — find out and we'll hold somebody accountable."

According to Tuesday's congressional report, ATF agents in Mexico — and the Mexican government — received "little to no information" about the gunrunning probe from their counterparts in Phoenix — even as they were reporting that an alarming number of weapons found at cartel crime scenes were being traced back to Arizona,

"I wasn't convinced that this happened until this past April after all the allegations were made, and I talked to different people," the ATF's acting attache in Mexico City told Congressional investigators. "I was beyond shocked. Embarrassed. I was angry. I'm still angry. Because this is not what we do….I mean, this is the perfect storm of idiocy."

Three ATF supervisors — deputy director William McMahon and Phoenix field supervisors William Newell and David Voth — have been criticized for pushing the program, even as field agents warned that the operation had spiraled out of control. The LAT reported this week that all three were recently transferred to jobs in the ATF's Washington headquarters.

What Are The Political Implications?

Since the scandal broke rumors have swirled that the ATF's acting director, Kenneth Melson, would resign. An email obtained by the House Committee on Oversight shows that Melson knew of Fast and Furious and was even able to watch a live feed of straw buyers purchasing AK-47s from his Washington office.

According to the LAT, Melson was scheduled to meet with Congressional investigators on July 13, accompanied by DOJ attorneys. Instead, he met with them secretly over the July 4th holiday weekend, accompanied by his personal lawyer.

In his secret July 4 testimony, Melson told investigators that DOJ officials had told him to keep quiet, and asked him not to cooperate with the House probe. He added that the department seemed primarily concerned with protecting senior political appointees.

Concerned that Holder was looking to make Melson his "fall guy," Issa and Grassley subsequently wrote a letter detailing Melson's testimony to the DOJ, warning Holder not to fire or retaliate against the ATF director. The letter requests emails, memos, and notes from 12 senior DOJ officials.

In addition, Issa and Grassley wrote that Melson's testimony corroborated claims, from unidentified sources, that the Mexican drug cartel leaders targeted by Fast and Furious were apparently paid informants for the FBI and the DEA, a connection the ATF was not aware of. If Melson's allegations are true, the Fast and Furious investigation will widen to the other law enforcement agencies, and possibly the upper echelons of DOJ.

"Our investigation has clearly expanded," one source close to the investigation told the LAT. "We know now it was not something limited to just a small group of ATF agents in Arizona."

Holder has apparently requested the transcript of Melson's secret testimony for the DOJ and the Office of the Inspector General (OIG), according to a letter Grassley and Issa sent to the attorney general this week. The letter questions why Holder would request information on behalf of the OIG, whose investigation is supposed to be independent.

"Since the OIG is supposed to be conducting an independent inquiry, it seems odd that the Department would make a document request on behalf of that office," Grassley and Issa wrote in the letter, obtained by the Daily Caller. "We presume that if the OIG would like to make such a request, it is capable of doing so on its own initiative. However, we have not received any such request from the OIG."

Obama has so far resisted calls for Holder's resignation over the controversial program. When asked at a Spanish-language media roundtable last week whether Holder should quit, Obama forcefully responded, "No."